Modern Mediation: The Pre-Litigation Mandatory Mediation Clause

Many mediators will tell you that the mediations most likely to fail to reach a settlement are those that are required by a contract.  When the parties’ dispute is subject to a contractual condition that they must participate in mediation before commencing a formal lawsuit or arbitration, parties often treat the mediation as a necessary evil, as a box to check before getting serious. That’s not going to get your case settled.

These provisions are standard in residential real estate contracts as a condition precedent to recovering prevailing party attorney fees down the road, but also appear in a host of other agreements, including employment agreements.  No one likes to be compelled to mediation, but lawyers and mediators often overlook the extraordinary opportunity an early mediation can have, even when it is mandatory.

After all, an early settlement can save your client hundreds of thousands and even millions of dollars in future fees and costs.  Isn’t it worth spending the time to learn the strengths and weaknesses of your case, develop your themes, and get prepared to address your opponent’s evidence and narrative?  Even if your opponent has not shared their evidence with you in advance, the mediator can curate an exchange of information that gets you and your opponent what you need. At a minimum, participants should use the mediation to identify the core disputed issues.  This can create opportunities for some limited fact-gathering while keeping the mediation open.

Whether mediation is compelled or voluntary, it is never too early to talk about the resolution of a dispute.  Only a party’s persistent stubbornness or lack of preparation will render an early mediation futile.